72 FR 7604, February 16, 2007 Sunset Review POR: 2001-2005 ...administrative review of Corus Staal...

72 FR 7604, February 16, 2007A-421-807Sunset ReviewPOR: 2001-2005IA/Off7/SBPublic Document

MEMORANDUM TO: David Spooner Assistant Secretary for Import Administration

FROM: Stephen ClaeysDeputy Assistant Secretary for Import Administration

SUBJECT: Issues and Decision Memorandum for the Full Sunset Review ofthe Antidumping Duty Order on Certain Hot-Rolled Carbon SteelFlat Products from the Netherlands; Preliminary Results

Summary We have analyzed the substantive responses and rebuttal comments of interested parties in thefull sunset review of the antidumping duty order on certain hot-rolled carbon steel flat productsfrom the Netherlands. We recommend that you approve the positions described in the"Discussion of the Issues" section of this memorandum. Below is the complete list of therelevant issues upon which the Department of Commerce (the Department) received substantiveresponses and rebuttal comments from interested parties:

1. Legal authority to conduct sunset review;

2. The Corus Staal BV claim with regard to the Department’s practice embodied in the Sunset Review Policy Bulletin;

3. Likelihood of the continuation or recurrence of dumping: non-de minimis margins in administrative reviews;

4. Likelihood of the continuation or recurrence of dumping: significant decline in import volumes;

5. Magnitude of the margin likely to prevail: zeroing;

6. Magnitude of the margin likely to prevail: GalvPro LP;

7. Magnitude of the margin likely to prevail: duty absorption.

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History of the Order In the November 2, 2001, amended final determination of the antidumping duty investigation,covering the period October 1, 1999, through September 30, 2000, the Department determinedthe following weighted-average dumping margins: Corus Staal BV 2.59 percentAll Others 2.59 percent See Notice of Amended Final Determination of Sales at Less Than Fair Value; Certain Hot-Rolled Carbon Steel Flat Products From The Netherlands, 66 FR 55637 (November 2, 2001). The antidumping duty order was published on November 29, 2001 (see Antidumping DutyOrder: Certain Hot-Rolled Carbon Steel Flat Products From the Netherlands, 66 FR 59565(November 29, 2001)). Pursuant to remand determination, the Department amended theantidumping duty order to lift suspension of liquidation 180 days from the date of publication ofthe preliminary determination (October 30, 2001) and to resume collection of definitive duties onNovember 29, 2001, the date of publication of the antidumping duty order in the Federal Register(see Certain Hot-Rolled Carbon Steel Flat Products From The Netherlands: Notice of FinalCourt Decision and Suspension of Liquidation, 68 FR 60912 (October 24, 2003); and Notice ofAmended Antidumping Duty Order; Certain Hot-Rolled Carbon Steel Flat Products From TheNetherlands, 68 FR 74214 (December 23, 2003). The Department has completed two administrative reviews on imports of certain hot-rolledcarbon steel flat products from the Netherlands (see Certain Hot-Rolled Carbon Steel FlatProducts From the Netherlands; Amended Final Results of Antidumping Duty AdministrativeReview, 69 FR 43801 (July 22, 2004); and Certain Hot-Rolled Carbon Steel Flat Products fromthe Netherlands; Final Results of Antidumping Duty Administrative Review, 70 FR 18366,(April 11, 2005)). A third administrative review was initiated, but subsequently was rescinded(see Notice of Rescission of Antidumping Duty Administrative Review: Certain Hot-RolledCarbon Steel Flat Products From the Netherlands, 70 FR 21738 (April 27, 2005). Anadministrative review for the fourth review period (2004-2005) is currently ongoing, and thepreliminary results of that review have been published (see Certain Hot-Rolled Carbon Steel FlatProducts from the Netherlands; Preliminary Results of Antidumping Duty AdministrativeReview, 71 FR 71523 (December 11, 2006). An administrative review for the fifth reviewperiod (2005-2006) has been initiated (see Initiation of Antidumping and Countervailing DutyAdministrative Reviews, 71 FR 77720 (December 27, 2006).

The following is a summary of the four administrative review periods referenced above,including calculated weighted-average margins where relevant: May 3, 2001 - October 31, 2002Corus Staal BV: 4.80 percent

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November 1, 2002 - October 31, 2003Corus Staal BV: 4.42 percent November 1, 2003 - October 31, 2004administrative review of Corus Staal BV rescinded November 1, 2004 - October 31, 2005administrative review of Corus Staal BV is ongoing

November 1, 2005 - October 31, 2006administrative review of Corus Staal BV is ongoing

Background On August 1, 2006, the Department published its notice of initiation of the first sunset review ofthe antidumping duty order on certain hot-rolled carbon steel flat products from the Netherlands(see Initiation of Five-year ("Sunset") Reviews, 71 FR 43443 (August 1, 2006)). TheDepartment received a Notice of Intent to Participate from Corus Staal BV (“Corus Staal”) onAugust 8, 2006. The following domestic interested parties each submitted a Notice of Intent toParticipate, all within the deadline specified in section 351.218(d)(1)(i) of the SunsetRegulations, identifying themselves as interested parties under 771(9)(c) of the Tariff Act of1930, as amended (“the Act”):

Nucor Corporation (August 10, 2006)

Gallatin Steel, IPSCO Steel, Inc., and Steel Dynamics, Inc. (August 15, 2006)

Mittal Steel USA (August 16, 2006)

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and

Service Workers International Union, AFL-CIO-CLC (August 16, 2006)

United States Steel Corporation (August 16, 2006)

The Department received a complete and timely substantive response from certain domesticinterested parties (United States Steel Corporation (“U.S. Steel”), Mittal Steel USA Inc., NucorCorporation, Gallatin Steel Company, Steel Dynamics Inc., and IPSCO Steel Inc.) (DomesticProducers) on August 31, 2006, within the deadline specified under Section 351.218(d)(3)(i) ofthe Sunset Regulations. The Department also received a complete substantive response fromCorus Staal on August 31, 2006. Corus Staal claimed interested party status as a foreignproducer, under section 771(9)(A) of the Act, and 19 CFR 351.102(b).

On September 8, 2006, the Department received rebuttal comments from U.S. Steel and fromCorus Staal. On September 20, 2006, the Department determined that domestic parties’ and respondents'August 31, 2006, submissions constituted adequate responses to the notice of initiation, in

1 The antidumping duty order was issued November 29, 2001, and the suspension of liquidation ensued onMay 3, 2001 (the date of the publication of the preliminary results of the less-than-fair-value investigation). Corus

Staal and domestic producers both presented data analysis based upon public U.S. Bureau of the Census import data,

under the assumption that Corus Staal accounted for all exports of subject merchandise that entered the United

States. The Department’s analysis of non-public entry-specific information, available via the U.S. Customs and

Border Protection ACS system, determined that Corus Staal has in fact accounted for virtually all such exports (see

the September 20, 2006, memorandum from Robert James to Richard Weible entitled “Sunset Review of Certain

Hot-Rolled Carbon Steel Flat Products from the Netherlands: Adequacy of Domestic and Respondent Interested

Party Responses to the Notice of Initiation”). Consequently, use of the public U .S. Bureau of the Census aggregate

data is reasonable for analyzing the general trend of import levels with respect to Corus Staal.

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accordance with section 351.218(e)(1)(ii) of the Department’s regulations. See the September20, 2006, memorandum from Robert James to Richard Weible entitled “Sunset Review ofCertain Hot-Rolled Carbon Steel Flat Products from the Netherlands: Adequacy of Domesticand Respondent Interested Party Responses to the Notice of Initiation.” As a result, theDepartment determined, in accordance with section 351.218(e)(3) of the Sunset Regulations, toconduct a full (240 day) review.

The Department extended the deadlines for the preliminary results of this review and the finalresults of this review to February 12, 2007, and June 22, 2007, respectively. See Certain Hot-Rolled Carbon Steel Flat Products from the Netherlands; Extension of Time Limits forPreliminary and Final Results of Full Five-Year ("Sunset") Review of Antidumping Duty Order,71 FR 67854 (November 24, 2006).

Discussion of the Issues

In accordance with section 751(c)(1) of the Act, the Department is conducting this sunset reviewto determine whether revocation of the antidumping duty order would likely lead to continuationor recurrence of dumping. In this case, the Department considered the weighted-averagedumping margins determined in the investigation and subsequent reviews, and the volume ofimports of certain hot-rolled carbon steel flat products from the Netherlands for the period beforeand the period after the issuance of the antidumping duty order.1 In considering these data, theDepartment finds the following indicative of the likely continuation or recurrence of dumping:whether dumping continued at any level above de minimis after the issuance of the antidumpingduty order; whether the imports ceased after the issuance of the order; and whether dumping waseliminated and import volumes declined significantly after the issuance of the order. In addition,pursuant to section 752(c)(2) of the Act, the Department considered whether good cause toconsider other price, cost, market or other economic factors was shown in this case.

The Department found that dumping of the subject merchandise continued since the issuance ofthe antidumping duty order. The Department also found that imports of the subject merchandisedeclined significantly after the issuance of the order.

1. Legal authority to conduct sunset review

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Corus Staal’s Substantive Response:

Corus Staal claims that because a valid antidumping duty order on certain hot-rolled carbon steelflat products from the Netherlands no longer exists (and, indeed, never existed), there is no legalauthority for the Department to conduct this sunset review and, therefore, it should be terminatedand the order revoked.

Corus Staal states that the World Trade Organization determined that there has been no validfinding of dumping with respect to the subject merchandise, citing to the World TradeOrganization dispute in United States - Laws, Regulations and Methodology for CalculatingDumping Margins (“Zeroing”), WT/DS294, which resulted in a report by the World TradeOrganization Panel on October 31, 2005, and by the World Trade Organization Appellate Bodyon April 18, 2006 (US - Zeroing (EC)). Corus Staal states that the World Trade Organizationpanel and Appellate Body found the investigation underlying the antidumping duty order, as wellas each subsequent administrative review under the order, to be based upon a margin calculationmethodology – zeroing – that is inconsistent with U.S. obligations under the World TradeOrganization Antidumping Agreement.

Corus Staal states that the United States expressed its understanding of the World TradeOrganization determination in U.S. Statement at the WTO Dispute Settlement Body Meeting,Press Release of the U.S. Mission to the United Nations in Geneva at 1 (May 30, 2006) and inUS - Zeroing (EC), Communication by the United States WT/DS294/18 at paragraph 12 (June19, 2006). Corus Staal asserts that the United States committed to implement the directives ofthe World Trade Organization on this matter by April 9, 2007, citing US - Zeroing (EC),Agreement under Article 21.3(b) of the DSU, WT/DS294/19 (August 1, 2006). Corus Staalclaims that the United States has acknowledged that zeroing is impermissible in any antidumpingduty margin computation methodology, and that it has been uniformly acknowledged that had theDepartment not zeroed in the investigation, Corus Staal would have had an overall negativedumping margin, which would have prevented the issuance of the order underlying this review.

Corus Staal concludes that prior to the initiation of this sunset review in August 2006, the UnitedStates had agreed to a decision which found invalid both the order upon which this review isbased and the authority of the Department to conduct this review. Corus Staal states that if theDepartment continues to conduct this sunset review, it will be in breach of its World TradeOrganization obligations.

Corus Staal notes further that even if the initiation of this sunset review is deemed valid becausethe order has not yet been revoked, the order itself will cease to be validly issued by no later thanApril 2007, as a matter of both U.S. law and international law, and that given the future-orientedthrust of a sunset review, the Department must take this fact into account and terminate thisreview.

U.S. Steel’s Rebuttal

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U.S. Steel states that neither the World Trade Organization Panel nor the Appellate Body foundthat there had been no valid finding of dumping with respect to subject merchandise, or that theantidumping duty order on such merchandise was invalid. U.S. Steel also states that neither theWorld Trade Organization Panel nor the Appellate Body instructed the Department to revoke theorder. Rather, the decision pertained to the Department’s use of zeroing.

With respect to zeroing, U.S. Steel states that the World Trade Organization decision may not beimplemented because to do so would be in violation of U.S. law. U.S. Steel argues that even ifthe World Trade Organization decision could be implemented under U.S. law, it need not beimplemented, and zeroing has been upheld repeatedly by U.S. courts as a reasonableinterpretation of the statute, and cites various decisions in support of this. U.S. Steel points outthat decisions issued by World Trade Organization panels and the Appellate Body have no powerto change U.S. law or to order such a change, and that the Congress and the Administration maydecide not to implement an adverse World Trade Organization decision at all. Consequently,U.S. Steel argues, the Department is not required to eliminate zeroing.

Department’s Position

The Department published an antidumping duty order on Certain Hot-Rolled Carbon Steel FlatProducts from the Netherlands on November 29, 2001 (see Antidumping Duty Order: CertainHot-Rolled Carbon Steel Flat Products From the Netherlands, 66 FR 59565 (November 29,2001). The Department has never revoked that order. As such, it remains in effect and is validunder U.S. law.

With respect to US - Zeroing (EC), the Department recently announced that it was modifying itscalculation of the weighted-average dumping margin when using average-to-average comparionsin antidumping investigations. See Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin During an Antidumping Investigation; Final Modification, 71 FR77722 (December 27, 2006). In doing so, the Department declined to adopt any othermodifications concerning any other methodology or type of proceeding, such as administrativereviews. 71 FR at 77724. In addition, the United States has not yet gone through the statutorilymandated process of determining how to implement the report with respect to the specificadministrative reviews that were subject to the US - Zeroing (EC) dispute. See 19 U.S.C. 3538.

In accordance with the requirements of section 751(c)(1) of the Act and 19 C.F.R. 351.218(c),the Department initiated this sunset review on August 1, 2006. The Department will continue toconduct this sunset review according to the requirements of U.S. law and Departmentregulations.

2. The Corus Staal claim with regard to the Department’s practice embodied in theSunset Review Policy Bulletin


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The Department normally will determine that revocation of an antidumping duty order is likely tolead to continuation or recurrence of dumping when one of the following conditions exist:

a) dumping continued at any level above de minimis after the issuance of the order;

b) imports of the subject merchandise ceased after issuance of the order; or

c) dumping was eliminated after the issuance of the order or the suspensionagreement, as applicable, and import volumes for the subject merchandisedeclined significantly.

See Policies Regarding the Conduct of Five-year ("Sunset") Reviews of Antidumpingand Countervailing Duty Orders; Policy Bulletin, 63 FR 18871, 18872 (April 16, 1998).

Corus Staal argues that a recent decision by the Court of International Trade (“CIT”) prohibitsthe Department from relying on presumptions in sunset reviews in order to find a likelihood ofcontinuation or recurrence of dumping. Corus Staal cites Dillinger v. United States, 193 F. Supp.2d 1339 (Court of International Trade 2002) as finding that the Department may not merely relyon the original dumping margin to establish a likelihood of continuation or recurrence ofdumping.

Corus Staal also argues that recent decisions by the World Trade Organization prohibit theDepartment from relying on presumptions in sunset reviews in order to find a likelihood ofcontinuation or recurrence of dumping. Specifically, Corus Staal cites:

United States - Sunset Reviews of Anti-Dumping Measures on Oil Country TubularGoods From Mexico, WT/DS282/R at paragraph 8.1 (Panel Report June 20, 2005) asfinding that the Department’s reliance on the factors listed in Policies Regarding theConduct of Five-year ("Sunset") Reviews of Antidumping and Countervailing DutyOrders; Policy Bulletin improperly establish an irrebutable presumption of continuationor recurrence of dumping in the absence of an order.

United States - Sunset Reviews of Anti-Dumping Measures on Oil Country TubularGoods from Argentina, WT/DS268/AB/R (AB Report November 29, 2004) as findingthat Policies Regarding the Conduct of Five-year ("Sunset") Reviews of Antidumping andCountervailing Duty Orders; Policy Bulletin, including its presumptions, can bechallenged as a WTO-inconsistent measure.

United States - Sunset Review of Anti-Dumping Duties on Corrosion-Resistant CarbonSteel Flat Products from Japan, WT/DS244/AB/R (AB Report December 15, 2003), inwhich the Appellate Body stated:

1) they “believe that a firm evidentiary foundation is required in each case fora proper determination under Article 11.3 of the likelihood of continuation

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or recurrence of dumping,” and that “{s}uch a determination cannot bebased solely on the mechanistic application of presumptions....” (atparagraph 178);

2) several concerns regarding Policies Regarding the Conduct of Five-year("Sunset") Reviews of Antidumping and Countervailing Duty Orders;Policy Bulletin, including the presumptions found therein, but lackedrelevant facts to determine if the policies were inconsistent with the WorldTrade Organization (no paragraph cited);

3) Article 11.3 suggests to them that authorities must conduct a rigorousexamination in a sunset review before the exception (namely, thecontinuation of the duty) can apply, and it appears that the drafters of theAnti-Dumping Agreement saw the sunset review as a rigorous processbecause a sunset review can take up to one year, involving a number ofprocedural steps, and requiring an appropriate degree of diligence on thepart of the national authorities (at paragraph 113); and

4) the text of Article 11.3 contains an obligation to “determine” likelihood ofcontinuation or recurrence of dumping and injury, and that while the textdoes not provide explicit guidance regarding the meaning of the term“determine,” the ordinary meaning of the term precludes an investigatingauthority from simply assuming that likelihood exists, and such adetermination of likelihood should be on the basis of positive evidenceconstituting a sufficient factual basis for drawing reasoned and adequateconclusions in this regard (at paragraphs 114-115).


U.S. Steel argues that Dillinger v. United States involved a countervailing duty order, not anantidumping duty order, and involved certain factors that are unique to countervailing duty cases,such as the impact of amortization of the benefits from certain subsidies and evidence on therecord regarding changes in ownership of certain companies. Even if one assumed that thisdecision pertains to sunset reviews of antidumping duty orders, U.S. Steel argues, in this case theoriginal dumping margin need not and should not be relied upon to establish likelihood, as CorusStaal had non-de minimis weighted-average margins in both of the administrative reviewscompleted by the Department.

U.S. Steel notes that no World Trade Organization decision, including those cited by Corus Staal,has found Policies Regarding the Conduct of Five-year ("Sunset") Reviews of Antidumping andCountervailing Duty Orders; Policy Bulletin or the scenarios for finding likelihood ofcontinuance or recurrence of dumping contained therein (e.g., continued dumping margins) toimproperly establish a conclusive and irrebutable presumption of likelihood. U.S. Steel statesthat, on the contrary, the World Trade Organization Appellate Body has specifically rejected such

2 See, e.g., Oil Country Tubular Goods From Argentina, Italy, Japan, and Korea; Final Results of Five-Year("Sunset") Reviews of Antidumping Duty Orders, 71 FR 59074 (October 6, 2006), and Silicomanganese from

Brazil, Ukraine, and the People's Republic of China; Five-year Sunset Reviews of Antidumping Duty Orders; Final

Results, 71 FR 26927 (May 9, 2006)

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a finding and has upheld Policies Regarding the Conduct of Five-year ("Sunset") Reviews ofAntidumping and Countervailing Duty Orders; Policy Bulletin in no less than three separatecases, citing:

Unites States - Anti-Dumping Measures on Oil Country Tubular Goods (OCTG) fromMexico, WT/DS282/AB/R (November 2, 2005) at paragraph 219(e);

Appellate Body Report in United States - Sunset Reviews of Anti-Dumping Measures onOil Country Tubular Goods from Argentina, WT/DS268/AB/R (AB Report November29, 2004) at paragraph 365(b);

Appellate Body Report in United States - Sunset Review of Anti-Dumping Duties onCorrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R (ABReport December 15, 2003) at paragraphs 157, 209, 211, and 212(e).

Furthermore, U.S. Steel states that even Corus Staal itself (in footnote 14 of its SubstantiveResponse) acknowledges that the World Trade Organization Appellate Body has upheld theDepartment’s finding of likelihood in a case based on the presence of above de minimis dumpingmargins and a decline in the volume of imports after the issuance of the order, citing AppellateBody Report in United States - Corrosion-Resistant Steel from Japan at paragraphs 203-207. U.S. Steel notes that this fact pattern exists in this sunset review of the antidumping duty orderon certain hot-rolled carbon steel flat products from the Netherlands.


The Department found that Corus Staal continued to dump after the order went into effect (seeissue number 3 below; see also Certain Hot-Rolled Carbon Steel Flat Products From theNetherlands; Amended Final Results of Antidumping Duty Administrative Review, 69 FR 43801(July 22, 2004); and Certain Hot-Rolled Carbon Steel Flat Products from the Netherlands; andFinal Results of Antidumping Duty Administrative Review, 70 FR 18366, (April 11, 2005)). Also, the Department notes that imports declined significantly after the order went into effect(see issue number 4 below). Consistent with Department practice,2 either one of theseconclusions alone would be sufficient to find it likely that revocation of the order would lead tocontinuation or recurrence of dumping.

We agree with petitioners that the CIT decision referenced above did not pertain to sunsetreviews of antidumping duty orders. We also agree with petitioners that the weighted-averagedumping margin from the underlying less-than-fair-value investigation is not itself the basis for

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determining the likelihood of continuation or recurrence of dumping in this or any other sunsetreview. We also agree with petitioners that the World Trade Organization has not ruled that theDepartment’s criteria for determining likelihood must be abandoned (and has in fact upheld theuse of these criteria), and that, even if the World Trade Organization had made such adetermination, World Trade Organization determinations are not binding on U.S. Governmentagencies such as the Department.

3. Likelihood of the continuation or recurrence of dumping: non-de minimis marginsin administrative reviews


Corus Staal argues that while the Department calculated positive, non-de minimis weighted-average dumping margins for Corus Staal in the first and second administrative reviews, theweighted-average dumping margins for Corus Staal for each administrative review of Corus Staalthat was not rescinded (i.e., the completed first and second administrative reviews, and theongoing fourth administrative review) are in each instance negative if the Department’s margincalculation methodology does not zero out negative margins. Corus Staal reiterates that theDepartment cannot utilize zeroing in its methodology (see issue number 1 above), and arguestherefore that the Department cannot point to non-de minimis margins from administrativereviews as a basis for concluding that dumping would be likely to continue or recur if the orderwere revoked.

Corus Staal also argues that the trend in average import unit values for imports of subjectmerchandise from the Netherlands during recent periods demonstrate that dumping is not likelyto occur in the absence of an order. Specifically, Corus Staal states that average unit enteredvalues during the fourth administrative review period (November 1, 2004, through October 31,2005) and for June 2006 were nearly double those that prevailed during the investigation, andconcludes that such “prices” are “dumping-safe” and “dispel any conclusions that there is alikelihood of dumping in the future.”


U.S. Steel states that in the only two administrative reviews completed since the issuance of theorder, the Department determined that Corus Staal continued to dump the subject merchandise atabove de minimis levels. U.S. Steel also points out that those two administrative reviews werenot even amongst those that were challenged at the World Trade Organization, and that theWorld Trade Organization’s determination on that issue was limited to those investigations andadministrative reviews under challenge. In fact, the Department’s use of zeroing in the firstadministrative review was upheld by both the CIT and the Court of Appeals for the Federal

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Circuit, while its use of zeroing in the second administrative review was upheld by the CIT. U.S.Steel concludes that, based on the final results of the first and second administrative reviews, theDepartment can and should find that Corus Staal continued to dump the subject merchandise atan above de minimis level after the issuance of the order and that this, in turn, constitutescompelling evidence that dumping is likely to continue if the antidumping duty order is revoked.

With regard to Corus Staal’s analysis of entered value data, U.S. Steel argues that such data haveno bearing upon whether or not Corus Staal is or is not likely to dump in the future in the absenceof an antidumping duty order, given the multitude of factors that enter the calculations ofdumping margins. U.S. Steel states that Corus Staal’s assertions regarding market conditions arerefuted by other statements it made in its substantive response, noting that although Corus Staalasserted that the fourth administrative review import values were “dumping-safe,” it alsoacknowledged that it expects a positive and non-de minimis weighted average margin for thefourth administrative review if zeroing is used.

Domestic Producers’ Substantive Response

Domestic Producers note that weighted-average margins above de minimis were found for CorusStaal in the first two administrative reviews, and that the continued existence of such above deminimis margins, on its own, constitutes compelling evidence that dumping is likely to continuein the absence of the order.

Corus Staal’s Rebuttal

Corus Staal states that the Department is prohibited by the decision of the WTO Appellate Bodyfrom relying on margins calculated in its administrative reviews because zeroing methodologywas utilized in those administrative reviews.


In the first administrative review, Certain Hot-Rolled Carbon Steel Flat Products From theNetherlands; Amended Final Results of Antidumping Duty Administrative Review, 69 FR 43801(July 22, 2004), and the second administrative review, Certain Hot-Rolled Carbon Steel FlatProducts from the Netherlands; Final Results of Antidumping Duty Administrative Review, 70FR 18366 (April 11, 2005), the Department calculated weighted average dumping margins thatwere above de minimis. The results of both reviews have been upheld by the courts. See CorusStaal BV v. United States, 387 F. Supp. 2d 1291 (CIT 2005), aff’d per curiam, 2006 U.S. App.LEXIS 15022 (Fed. Cir. June 13, 2006); Corus Staal v. United States, Ct. No. 05-00354, Slip Op.06-112 (CIT July 25, 2006). We find that the continuation of dumping at above de minimis levelafter the imposition of the order is probative with respect to likelihood of continuation ofdumping if the order were to be revoked.

Furthermore, Corus Staal stated the following at 16-17 of its Substantive Response, in thecontext of its argument that there is no basis for finding that revocation is likely to lead to the

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continuation or recurrence of dumping:

In addition to the artificial market conditions resulting from the issuanceof this order on November 29, 2001, the market was further disrupted by theSection 201 steel investigations. Those investigations were initiated one monthinto the first period of review. Temporary safeguard measures in the form oftariffs were imposed on March 20, 2002, about half-way through the first periodof review and lasted until December 4, 2003, about one month into the thirdperiod of review, when the President terminated the temporary safeguardmeasures. Thus, at a minimum, these temporary safeguard measures affectedDutch imports during both the first and second periodic reviews.

During the period affected by the Section 201 safeguard cases, CorusStaal’s margins were calculated at 4.80%, for the first review, dropping to 4.42%for the second review. During that same time period (2001-2002), the quantity ofimports remained fairly constant. In the second review (2003), at the height of theSection 201 temporary measures and subject to remedial measures under twodifferent trade statutes, Corus’ imports dropped to their lowest levels in the post-order period. (See the 2003 trade data, which cover most of the second period ofreview.) With the cessation of the Section 201 tariffs at the end of 2003, Corus’margin in the third review dropped significantly, obviously below the calculatedmargin level in the second review.

Corus Staal thus suggests that the “disruptive” presence of the Section 201 tariffs on various hot-rolled carbon steel flat products contributed to the weighted-average margins of the first andsecond administrative reviews (which exceeded the weighted-average margin from theunderlying less-than-fair-value investigation), and that the cessation of those Section 201 tariffsremoved the disruption that contributed to those margins. The 30 percent tariff (later reduced to24 percent) was not deducted from U.S. price in the first and second administrative reviews, soCorus Staal was found to be dumping even in the presence of those additional Section 201 tariffs. In other words, despite the presence of an additional 30 percent (later 24 percent) tariff onimports of its merchandise, Corus Staal’s calculated weighted-average dumping margins actuallyincreased. Rather than increase its U.S. prices relative to home market prices, Corus Staalcontinued to dump, and with overall higher margins.

With respect to the entered value data cited by Corus Staal, we agree with U.S. Steel that suchdata are not sufficient for determining whether or not Corus Staal has been dumping, nor are theyan indication of whether or not Corus Staal would be likely to continue to dump in the absence ofan order. The calculation of a weighted-average dumping margin does not utilize entered valuedata, and, even if such data were a reasonable proxy for U.S. prices, there are many facets of adumping margin calculation beyond U.S. prices.

4. Likelihood of the continuation or recurrence of dumping: significant decline inimport volumes

3 See the September 20, 2006, memorandum from Robert James to Richard Weible entitled “SunsetReview of Certain Hot-Rolled Carbon Steel Flat Products from the Netherlands: Adequacy of Domestic and

Respondent Interested Party Responses to the Notice of Initiation,” for analysis supporting the contention that such

public import data may be a reasonable proxy for actual exports by Corus Staal. Domestic Producers also used such

data in their substantive response.

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Corus Staal’s Substantive Response

As noted in issue number 3 above, Corus Staal argues that administrative review margincalculations that did not employ zeroing would result in weighted-average margins of well belowzero. Corus Staal notes that the Department’s normal practice is to determine that revocation ofthe order is likely to lead to continuation or recurrence of dumping even if there were no positivenon-de minimis margins if import volumes for the subject merchandise decline significantly. However, Corus Staal asserts that import volumes did not decline significantly during the five-year period of this sunset review.

Using public import data,3 Corus Staal states that its exports of subject merchandise from theNetherlands to the United States for the calendar years 2001 through 2005 were as follows(volume in metric tons; value in U.S. dollars):

Year Volume Entered Value

2001: 381,976 103,600,418

2002: 365,470 108,336,491

2003: 188,625 58,593,006

2004: 297,019 150,312,571

2005: 343,400 181,705,859

Corus Staal argues that since the imposition of the dumping order, its imports have remainedrelatively steady on a quantity basis or increased on a value basis, with the exception of theabnormal period during which the imports were subject to additional substantial Section 201tariffs. Those Section 201 tariffs were imposed on March 20, 2002, and lasted through almost allof 2003, until lifted on December 4, 2003. Corus Staal states that while the volumes were fairlyconstant in 2001 and 2002, they dropped to their lowest levels in the post-order period in 2003, ayear almost entirely affected by the Section 201 tariffs. Corus Staal notes that volumes andvalues have been rising since then, and that overall weighted-average margins for Corus Staalhave been at the same time declining, meeting the standard that “declining (or no) dumpingmargins accompanied by steady or increasing imports may indicate that foreign companies do nothave to dump to maintain market share in the United States and that dumping is less likely tocontinue or recur if the order were revoked” (see Policies Regarding the Conduct of Five-year("Sunset") Reviews of Antidumping and Countervailing Duty Orders; Policy Bulletin, 63 FR18871, 18872 (April 16, 1998)).

Corus Staal also notes the following import data, for each of the three most recent years, coveringthe two preceding fiscal quarters as of the month preceding the month in which the notice ofinitiation was published (i.e., the first and second quarters of the calendar years 2004, 2005, and

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2006) (volume in metric tons; value in U.S. dollars):

Year/Quarters Volume Entered Value

2004(1Q+2Q) 100,697 40,806,228

2005(1Q+2Q) 118,364 72,952,768

2006(1Q+2Q) 161,498 86,545,760

Corus Staal notes that the trend of increasing volumes and values is evident from these data aswell.


U.S. Steel states that Domestic Producers, in their substantive response, showed the significantdecline in imports based on data covering periods corresponding to the administrative reviewperiod for the order (see below, under “Domestic Producers’ Substantive Response”).

U.S. Steel points out that the decline is also evident based on the calendar year data reported byCorus Staal in its August 31, 2006, substantive response (for years 2001-2005, see above, under“Corus Staal’s Substantive Response;” for pre-order year 1999 total of 460,501, see CorusStaal’s August 31, 2006 substantive response at 32). The calendar year level fell from 460,501metric tons in 1999 to a low of 188,625 metric tons in 2003 before climbing somewhat to343,400 metric tons in 2005, still well below the pre-initiation volume for 1999.

U.S. Steel points out that section 752(c)(1)(B) of the Act directs the Department to compare thevolume of imports of subject merchandise before the issuance of the order to the volume ofimports after the issuance of the order, and that this has been Department practice (see, e.g.,Issues and Decision Memorandum accompanying Structural Steel Beams from Japan and SouthKorea; Final Results of Expedited Sunset Reviews of the Antidumping Duty Orders, 70 FR53633 (September 9, 2005), at “Likelihood of Continuance or Recurrence of Dumping” section). U.S. Steel notes that the Department has recognized that it may not use a year in which theantidumping duty order was in effect as the benchmark year against which to measure the trendin imports because the data from such a year “cannot logically reflect import volumes or pricingpractices likely to exist if the order were revoked” (see Issues and Decision Memorandumaccompanying Pure Magnesium from Canada, Final Results of Full Sunset Review, 65 FR 41436(July 5, 2000), at Comment 3 of the “Magnitude of the Margin Likely to Prevail” section). Evenwhere imports increased within some portion of the period covered by the five-year review, theDepartment will find that dumping is likely to continue or recur if the import volumes are belowthe pre-order levels (see, e.g., Issues and Decision Memorandum accompanying Paper Clips fromthe People’s Republic of China; Notice of Final Results of Expedited Sunset Review ofAntidumping Duty Order, 70 FR 67433 (November 7, 2005), at “Likelihood of Continuance orRecurrence of Dumping” section).


Domestic Producers provided public import data for successive twelve month periods defined by

4 The Department calculated a to tal of 508,310 metric tons for calendar year 2000, based upon publicimport data.

The source of the import statistics cited by interested parties and by the Department is the United States

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the recent periods of review, and extending back to prior to the order (data in short tons):

November 1999 - October 2000 589,318






The first period above corresponds roughly with the period of investigation of the underlyingless-than-fair-value investigation. The second period above spans a time prior to the suspensionof liquidation through the month prior to the antidumping duty order. The third period abovecovers a significant portion of the first administrative review period. The fourth through sixthperiods above correspond exactly with the three periods of review prior to the one for which anadministrative review is ongoing. Domestic Producers state that this approach to analyzingdistinct periods is consistent with Department practice (see Issues and Decision Memorandumaccompanying Oil Country Tubular Goods (“OCTG”) from Mexico; Final Results of SunsetReview of Antidumping Duty Order, 66 FR 14131 (March 9, 2001), at “Likelihood ofContinuance or Recurrence of Dumping” section). Domestic Producers note that these datademonstrate that, since the issuance of the order, shipments dropped to between 45 percent to 68percent of the pre-initiation level since the issuance of the order.


Corus Staal states that Domestic Producers disregard the effects of the Section 201 tariffs in theirimport volume analysis. Corus Staal states that even if the Department ignores the impact of theSection 201 tariffs, the value of imports from the Netherlands has increased significantly sincethe issuance of the order, and the decline in import volumes is not so great to be consideredsignificant. Corus Staal points out that in cases where the Department found significant importdeclines, such as Paper Clips from the People’s Republic of China; Notice of Final Results ofExpedited Sunset Review of Antidumping Duty Order 70 FR 67433 (November 7, 2005), thedecline from pre-order levels was 90 percent or even more.


The data presented by both Corus Staal and Domestic Producers demonstrate that there was asignificant decline in imports from the Netherlands attributed to Corus Staal between the periodjust prior to the order to the years of the order itself. For example, data presented by Corus Staalshow a decline of almost 60 percent from calendar year 1999 to calendar year 2003. If thecomparison is made between calendar year 2000 (the last year prior to the order) and calendaryear 2003, the decline is approximately 63 percent.4 Even the 2005 total cited by Corus Staal is

International Trade Commission’s Interactive Tariff and Trade DataWeb (see http://dataweb.usitc.gov). The

Harmonized Tariff Schedule of the United States (HTSUS) numbers used for the analysis by the interested parties

and the Department are all of those listed currently with the scope of the antidumping duty order (see, e.g., Certain

Hot-Rolled Carbon Steel Flat Products from the Netherlands; Final Results of Antidumping Duty Administrative

Review, 70 FR 18366, 18367 (April 11, 2005)). As HTSUS numbers typically cannot be said to contain only

subject merchandise, such an analysis is likely to somewhat overstate the actual imports of subject merchandise.

Note that the Department has already used this import tabulation methodology in this proceeding (see the September20, 2006, memorandum from Robert James to Richard Weible entitled “Sunset Review of Certain Hot-Rolled

Carbon Steel Flat Products from the Netherlands: Adequacy of Domestic and Respondent Interested Party

Responses to the Notice of Initiation”).

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approximately 25 percent below the 1999 level and about 33 percent below the 2000 level.

The import volume data Corus Staal provided for the first halves of calendar years 2004, 2005,and 2006 do not demonstrate the absence of a significant decline in shipments since the issuanceof the order because, among other reasons, those data do not include any period prior to theissuance of the order.

Furthermore, Corus Staal has not explained why value levels should be considered in thisanalysis rather than volume levels, and there appears to be no basis for departing from theDepartment’s normal practice of utilizing volume levels for analyzing whether or not shipmentshave declined significantly.

With respect to the Section 201 tariffs, Corus Staal has not demonstrated the extent to whichthose tariffs affected shipment levels. Furthermore, as noted, shipment levels for calendar yearssubsequent to the publication of the order but during which those Section 201 tariffs were not ineffect (e.g., 2001, 2004, and 2005) were all lower than shipment levels of pre-order calendaryears.

Finally, Corus Staal’s reference to Policies Regarding the Conduct of Five-year ("Sunset")Reviews of Antidumping and Countervailing Duty Orders; Policy Bulletin with respect to“declining (or no) dumping margins” is not relevant, as Corus Staal had positive weighted-average dumping margins in the first and second administrative reviews, and those margins wereactually greater than the margin from the underlying less-than-fair-value investigation.

5. Magnitude of the margin likely to prevail: zeroing


Corus Staal notes that, with regard to determining the magnitude of the likely margin of dumpingif the order were revoked, the Department normally will select dumping margins determined inthe original investigation or in a prior review, and that the Department will normally choose theinvestigation rate because that is the rate that reflects the behavior of exporters without thediscipline of an antidumping duty order in place. See Uruguay Round Statement ofAdministrative Action (“URAA”), H.R. Doc. No. 103-316, Vol. 1 at 890-891 (1994), reprinted

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in U.S.C.C.A.N. 3773.

Corus Staal argues that in this sunset review the Department cannot simply rely on the marginscalculated in the investigation or the subsequent periodic reviews in making its determination ofthe magnitude of dumping margin likely to prevail because those proceedings utilizedmethodology (i.e., zeroing) inconsistent with U.S. obligations under the World TradeOrganization. Corus Staal states that the World Trade Organization Appellate Body hasexpressly stated that methodologies employed in one phase of a proceeding and found to beinconsistent with the World Trade Organization cannot taint the outcome of subsequent phases ofthe proceedings, such as sunset reviews. See United States - Sunset Review of Anti-DumpingDuties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, Reportof the Appellate Body, December 15, 2003. Corus Staal claims that the United States has agreedto change its policy on zeroing by April 2007 so that it is consistent with its World TradeOrganization obligations, and that once zeroing is eliminated, the margins from the underlyinginvestigation and the administrative reviews would be negative. Corus Staal concludes that theonly lawful margins that can be forwarded to the United States International Trade Commission(“ITC”) as those likely to prevail would be negative (or zero) margins.


U.S. Steel states there is only one instance where the Department may report to the ITC a lowermargin than that calculated in the underlying investigation. U.S. Steel states that the Departmentmay report a more recently calculated weighted-average dumping margin that is lower than theinvestigation rate for a company where “dumping margins declined or dumping was eliminatedafter the issuance of the order...and import volumes remained steady or increased” (see PoliciesRegarding the Conduct of Five-year ("Sunset") Reviews of Antidumping and CountervailingDuty Orders; Policy Bulletin, 63 FR 18871, 18873 (April 16, 1998)), but neither of thoseconditions exist with respect to this sunset review. Furthermore, U.S. Steel notes that the WorldTrade Organization determinations are not binding on the Department, and do not require that theDepartment make any changes to Corus Staal’s margin in the underlying investigation. In fact,the Department may not recalculate Corus Staal’s dumping margin from the investigation toeliminate zeroing.


Domestic Producers suggest that the margin of 2.59 percent for Corus Staal and 2.59 percent forAll Others be transmitted to the ITC as the margins likely to prevail if the order is revoked, withno reference to zeroing.


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Corus Staal repeats its objection to the margins from the underlying investigation beingtransmitted to the ITC, based in part on its argument that zeroing was unlawfully employed in theinvestigation.


Section 752(c)(3) of the Act provides that the Department shall provide to the ITC the magnitudeof the margin of dumping likely to prevail if the order were revoked. The Department normallywill report to the ITC as the margin likely to prevail the rate from the investigation because thatis the only calculated rate that reflects the behavior of exporters without the discipline of an orderin place. We preliminarily determine that it is appropriate to do so in this case, particularly sincethe Department’s calculation of the weighted-average dumping margin in the investigation wasupheld by the U.S. Court of Appeals for the Federal Circuit. See Corus Staal BV v. Departmentof Commerce, 395 F.3d 1343, 1349 (Fed. Cir. 2005), cert. denied, 126 S. Ct. 1023 (2006).

6. Magnitude of the margin likely to prevail: GalvPro LP


Corus Staal argues that in this sunset review the Department cannot simply rely on the marginscalculated in the investigation or the subsequent periodic reviews in making its determination ofthe magnitude of dumping margin likely to prevail because, in addition to what it considers theunlawful use of zeroing in the underlying investigation, it contends that the calculations used inthe investigation overstated the actual margins that could be expected going forward as a result ofthe inclusion of sales by a U.S. affiliate called GalvPro LP. Corus Staal states that it had arguedthe sales of damaged merchandise by GalvPro LP, a processor that Corus Staal jointly ownedwith a U.S. producer, had been outside the ordinary course of trade and, in any case, GalvPro LPhad ceased production prior to the end of the period of investigation and had filed for bankruptcy. Corus Staal acknowledges that the CIT has upheld the inclusion of sales by GalvPro LP in theinvestigation margin calculations, but Corus Staal contends that the sales by GalvPro LP, whichlong ago ceased and which it states will not resume, have no relevance to the issues in this sunsetreview, which Corus Staal states focuses exclusively on the future. Corus Staal estimates that arecalculation of the margin from the investigation that excludes GalvPro LP sales and holdseverything else constant results in a weighted-average margin that is de minimis.


U.S. Steel states that there was no basis for exclusion of GalvPro LP sales from the calculation ofCorus Staal’s margin in the investigation, as confirmed by the CIT (see Corus Staal BV v. U.S.Department of Commerce, 259 F. Supp. 2d 1253, 1267-69 (Court of International Trade 2003),and that there is no basis for excluding them in the context of this sunset review.

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Domestic Producers suggest that the margin of 2.59 percent for Corus Staal and 2.59 percent forAll Others be transmitted to the ITC as the margins likely to prevail if the order is revoked, anddo not mention GalvPro LP sales.


Corus Staal reiterates that, for purposes of this sunset review and the magnitude of the marginlikely to prevail, the investigation margin should be recalculated to exclude GalvPro sales.


It has not been the Department’s policy to alter investigation margins to account for what may ormay not have happened to respondents and/or the parties with which it dealt during theinvestigation period. Corus Staal has provided no legal or precedential basis for suchmanipulations, either in general or with respect to GalvPro LP sales. Consequently, for purposesof this sunset review and the rate the Department may forward to the ITC, the Department is notadjusting the investigation margin to remove the impact of GalvPro LP sales.

7. Magnitude of the margin likely to prevail: duty absorption


With respect to the magnitude of the margin likely to prevail if an order is revoked, theDepartment has stated the following:

where the Department has found duty absorption in the fourth administrative review ofthe order (or, for transition orders, in an administrative review initiated in 1998), theDepartment normally will -

a) determine that a company’s current dumping margin is not indicative ofthe margin likely to prevail if the order is revoked; and

b) provide to the Commission the higher of the margin that the Departmentotherwise would have reported to the Commission or the most recentmargin for that company adjusted to account for the Department’s findingson duty absorption. The Department normally will adjust a company’smost recent margin to take into account its findings on duty absorption byincreasing the margin by the amount of duty absorption on those sales forwhich the Department found duty absorption.

See Policies Regarding the Conduct of Five-year ("Sunset") Reviews of Antidumping and

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Countervailing Duty Orders; Policy Bulletin, 63 FR 18871, 18874 (April 16, 1998).

In its Substantive Response discussion of the magnitude of the margin likely to prevail (seeissues number 6 and number 7 above), Corus Staal made no explicit mention of duty absorption. Elsewhere in that submission, however, Corus Staal characterizes as unlawful the Department’sinitiation of inquiries into whether or not Corus Staal was absorbing antidumping duties assessedon entries of subject merchandise during the second and fourth administrative review periods. Corus Staal claims that the Department had no basis to initiate the absorption inquiries becauseCorus Staal is itself the importer, and that the inquiries themselves are unlawful because theinquiries start from the presumption the absorption is taking place (a presumption that CorusStaal states has not been rebutted in more than 10 years).

With regard to the second administrative review (in which, Corus Staal notes, the Departmentfound duty absorption in its preliminary results, but made no reference to it in its final results),Corus Staal acknowledges that the CIT upheld the Department’s determination that Corus Staalwas absorbing duties, but notes that it intends to appeal that decision to the Court of Appeals forthe Federal Circuit. Corus Staal notes that the Department has made no finding regarding dutyabsorption in the ongoing fourth administrative review, and has extended the time limit for thepreliminary results in that review until November 30, 2006.


U.S. Steel points out that even Corus Staal acknowledges that the CIT has upheld theDepartment’s absorption ruling in the second administrative review, and that the Department hasinitiated a duty absorption inquiry in the fourth administrative review. U.S. Steel states that if theDepartment finds that Corus Staal has absorbed duties for the fourth administrative reviewperiod, this may impact the rate to be reported to the ITC as the dumping margin likely to prevailin the event of the revocation of the order, in accordance with stated Department practice. U.S.Steel states that Corus Staal has not provided any basis to do otherwise.


Domestic Producers made no allusion to duty absorption in their substantive response. Theynoted simply that the margins from the investigation should be those determined likely to prevailif the order was revoked.


Corus Staal states that, to the extent that any of the margins calculated thus far are to beforwarded to the ITC, Corus Staal agrees with the Domestic Producers that a rate calculated fromsales during the period of investigation is the most appropriate. As noted elsewhere, Corus Staalbelieves such an investigation rate should be one recalculated without implementation of a

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zeroing methodology.


We agree with U.S. Steel that, if the Department were to determine that duty absorption tookplace for the fourth administrative review period, the Department should consider that whendetermining what should be transmitted to the ITC as the margins likely to prevail if the order isrevoked. See, e.g., Cut-to-Length Carbon Steel Plate From Belgium, Brazil, Finland, Germany,Mexico, Poland, Romania, Spain, Sweden, and the United Kingdom and Carbon Steel PlateFrom Taiwan; Second Five-year (Sunset) Reviews of Antidumping Duty Orders andAntidumping Finding; Final Results, 71 FR 11577, 11579 (March 8, 2006)). As the antidumpingduty order in question was issued on or after January 1, 1995, the Department will consider theresults of the duty absorption analysis in the fourth administrative review with respect to themagnitude of the margin likely to prevail if that administrative review is completed prior to thecompletion of this sunset review.

Preliminary Results of Sunset Review

We preliminarily determine that revocation of the antidumping duty order on certain hot-rolledcarbon steel flat products from the Netherlands would be likely to lead to the continuation orrecurrence of dumping at the following weighted-average percentage margins:

_______________________________________________________________________Manufacturers/Exporters Weighted-Average Margin (percent)_______________________________________________________________________Corus Staal BV 2.59All Others 2.59

Recommendation

Based on our analysis of the responses received, we recommend adopting all of the abovepositions. If these recommendations are accepted, we will publish the preliminary results ofreview in the Federal Register.

AGREE ______ DISAGREE ______

_____________________David M. SpoonerAssistant Secretary for Import Administration

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_____________________Date

72 FR 7604, February 16, 2007 Sunset Review POR: 2001-2005 ...administrative review of Corus Staal...

Documents

Transcript of 72 FR 7604, February 16, 2007 Sunset Review POR: 2001-2005 ...administrative review of Corus Staal...